Across industries, businesses are collecting, storing and using increasing amounts of consumer data. This has been made possible by the growth in broadband connectivity, particularly through smartphone penetration, and the increased capacity to collect and share data on individuals. Technological developments in data analytics have increasingly allowed businesses to use this data to better understand consumers to design products suited to their individual needs and better target them to sell these products.

Across emerging insurance markets, the use of insurance remains limited. A lack of reliable data on consumers and the risks they face often requires insurers to charge higher premiums to account for the uncertainty of the risks, and it limits their ability to understand consumers’ needs. Leveraging these vast new datasets means that insurers can price more accurately for risk, can better understand their consumers’ needs and accordingly design better products, and can better monitor and reduce the incidence and cost of fraud. The implication is that embracing the use of new datasets has the potential to substantively increase insurance inclusion.

While there are many potential benefits from insurers making increased use of data, it also introduces new risks for consumers. For example, consumer data can be used in harmful ways, such as when private information is stolen and exploited or when data is used to exclude high-risk customers. Other risks also emerge when consumer data is used to influence decision-making and, in some cases, eliminate options to control what the consumer can and cannot buy.

Insurance regulators are often ill-equipped to understand and deal with the range of emerging risks. Furthermore, in most jurisdictions, data protection regulation falls under the mandate of the communications or data regulator. As most of these data issues are cross-cutting (not just across the financial sector but often across the entire services sector), the insurance regulator is frequently in a challenging position to deal with these data-related risks.

This study – conducted together with the Access to Insurance Initiative (A2ii) and supported by Financial Sector Deepening Africa (FSDA) – aims to unpack and define the different data-related risks within inclusive insurance, explore the consumer protection issues that arise, consult supervisors from different regions on their experiences and approaches in this regard, and generate practical insights to inform guidance to regulators on how to deal with these emerging risks.

Initial findings from the project were presented at the 13^th Consultative Forum 2018 on Mobile Insurance and InsurTech: rising to the regulatory challenge on the afternoon of Wednesday 9 May and the morning of Thursday 10 May 2018. The Consultative Forum was co-hosted by the African Insurance Organisation, the International Association of Insurance Supervisors (IAIS), the Access to Insurance Initiative (A2ii) and the Microinsurance Network (MIN).

The note below briefly outlines these initial findings. They will be augmented and adjusted through additional research and interviews.